Earlier this morning, Lupaka Gold (LPK.TO) has published a press release citing its intentions to bring the Invicta polymetallic project back into production before the second half of next year. As this obviously is an interesting development which could be the source of early cash flow at a low initial capex (Lupaka thinks it can bring Invicta back into production for just $1.5M), we sat down with Eric Edwards, CEO of Lupaka Gold to better understand this strategic move.

– In your recent press release you stated you could bring Invicta back into production for an initial capital expenditure of just $1.5M. This sounds extremely low and we were wondering if you could elaborate on this number a bit further and expand on the potential processing facilities in the neighborhood.

The primary development is in place with previous owners having spent $5-$10 million on road and underground infrastructure. The mineralized vein already has bottom drifts and cross cuts in place. High grade mineralized rock is readily accessible for contract mining as the existing tunnels intersect the mineralized Atenea Vein at some of its highest grade blocks.

Small scale production only requires some ventilation and safety upgrades to commence production. Ramps to the upper levels will be initially short. Using contract mining, haulage, and toll processing, Lupaka can avoid the capital costs and financial risks which are typical with initial mine access, plant processing and tailings facilities.

We have identified several process plants within economic transport distance that have excess capacity and are able to buy poly-metallic mineralized rock. Initial discussions have commenced and the pricing and performance commitments are within the economic parameters of our plan.

– Can you give us some more details about the expected timeline to restart production at Invicta?

Permitting should take up to 7 months for the exploitation permits. During this time, we will also complete detailed engineering and engage contractors. Contractor mobilization will begin upon receiving the necessary permits, and pre-production development should be completed within three months.

Some mineralized rock will be mined during development, but we expect to commence production at 300 tonnes per day within 12 months.

– Does this mean you’ll be fully focused on Invicta in the coming 12 months and that exploration work at Crucero will be put on the backburner for a while?

Crucero will remain our primary exploration focus, and we continue to believe that additional mineralized zones will be found on the property. Crucero is still very much in the steep part of the gold discovery curve. Field work will continue in 2014 and be princiipally directed toward the A-1 Structural Corridor we’ve identified, which extends to the north-west and south-east of our existing resource at A-1.

– What output are you expecting with a 300tpd throughput?

Invicta holds polymetallic deposits with approximately 70% of the revenues expected to be generated from gold, and the remainder from copper. According to the tonnes and grade available in the Measured resource, we believe that we could produce more than 20,000 equivalent ounces of gold in the first 12 months of steady state production.

> Click here to read the press release

Disclosure: The author holds a long position in Lupaka Gold. Please see our disclaimer for current positions.

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